Medicaid Morass: Reflecting frustration around the U.S. with out-of-control Medicaid costs, New York Gov. Andrew Cuomo and state legistators agreed on a 4% spending cap for the health-care program for the poor, the WSJ reports . The deal sets the stage for an overhaul of the program, the New York Times says . The budget doesn’t include a cap on malpractice awards, a priority item for the hospital industry. Housing Busts Health: It’s not just the next budget that is affecting health care for the needy. The Washington Post reports on the struggles of Michigan’s Genesee County Health Department , which has closed a clinic providing free infant formula to poor mothers and cut back services at an STD clinic. The effect of plunging housing prices and foreclosures on tax revenue amid the economic slump are among the reasons cited. Brain Drain?: Neuroscience is taking a hit in Big Pharma’s effort to make its R&D operation more productive, says the

WSJ. AstraZeneca, GlaxoSmithKline, Sanofi-Aventis and Merck are among big drug companies to scale back basic research into how the brain the works. The moves threaten development of new medicines for such big ticket medical problems as schizophrenia, stroke and depression, experts tell the WSJ. Let’s Innovate: The prospect of 32 million more Americans getting access to the health care system under last year’s health-care legislation and continued concern over spiraling health costs means innovation in medicine is as important as ever, the WSJ says in a special report. One article describes accountable care organizations, entities intended to help doctors, clinics and hospitals to collaborate on care delivery, as “unicorns” because “no one has ever seen one.” New mobile medical devices and a project in Nashville to encourage its residents to adopt healthy living habits are among other topics covered by the report.

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AM Vitals: New York Budget Pact Takes Aim at Medicaid Spending